Which of the following variables in the Black-Scholes-Merton option pricing model is the most difficult to obtain?
A)the volatility
B)the risk-free rate
C)the stock price
D)the time to expiration
E)the exercise price

Question

Quizplus · Accepted Answer

The volatility is the most difficult variable to obtain as it is a measure of the stock's fluctuation and cannot be directly observed. It needs to be estimated using historical data or implied volatility derived from the current market price of the option.

Which of the Following Variables in the Black-Scholes-Merton Option Pricing